Thoughts the CWB One Time Changes to Early Pricing Options

[charliep]

You are likely getting my sensitivity on the issue of calling the market - people calling me asking me what to do.

I do my best to explain the fundamentals/drivers and my opinion. I also do my best to encourage action - a $1/bu rally has to be rewarded with a sale no matter how small. I also talk to clients about the basis they are being offered, their financial situation (mainly cashflow needs) and their risk tolerance. On the latter, some farmers (believe it or not) are born risk takers - they will risk a dollar to make a dime.

The CWB is offering farmers these tools to assist with mainly the cashflow side of their business. I would encourage any farm manager who is getting squeezed by cashflow issues in their business and who has not used the early pricing options already to do so now. Realizing their is a cost ($2/bu for 100 % alternative for wheat ex durum) and 50 cents/bu for 90 % option for all pools (not feed wheat so be carefull), they are worthwhile using. Not only can you increase the amount of cash you have this spring but it also serves as a minimum price contract - no one can take this money away from you if actual payments are lower but you still can benefit from additional payments if results are higher.

[charliep]

Too early. Not $2/bu. That should be $2/tonne and 50 cents/tonne respectively. I hope I am more wide awake curling in the next hour.

[Incognito]

U subbing for Ferby this weekend, Charles?

[charliep]

The answer would be no. I moved from my normal position as lead to skip. Without going into details, the same person who confused bushels and tonnes was at the rink this morning. An early coffee. Need I say more.

[TOM4CWB]

Charlie;

Wouldn't you agree that early in the pool year... that the risk of a major decrease in the pool is the greatest... that as we close in on July 31st the value of EPO's time value decreases?

I would agree that the 90% EPO doesn't cost much... but after all it is our own money in the first place... so why should it?

Now if we could reinstate 04-05 cash pricing through the PPO prepricing for the next crop year... as was the accepted policy till the end of January... we could get back some decent choices.

It is simply amazing how the CWB so often chokes on their own foot... they seem to have a habit of sticking it in their mouths, often; of late!

[charliep]

Just have my farmer advisor hat on versus the policy one.

I don't think farmers realize how different the new world is for the CWB and the impact it will have on their risk management approach. The removal of Government guarantees and the development of a contingency fund will likely see 80 or 90 percent of expected total payments common in the future. It will also likely mean shorter pooling periods, class based pools versus the one large one for non durum wheat, a disciplined hedging program for the pools, etc.

This will mean more marketing alternatives even in the CWB system.

[TOM4CWB]

Charlie;

Can't wait till the CWB gets on with class splitting.

On Hard White Earl said if White takes markets from red, then red must sell into markets like Iraq/Iran at very low value... the Hard white must cross subsidise CWRS.

Obviously the Same goes for HRW, CPS Red.

No wonder we can't get a fair price for winter wheat and CPS. It is impossible the way the CWB pooling works today.